Investment & Entrepreneurship in Online Media and Technology

How Google Runs its Innovation

After several attempts at structuring their development process, Google has arrived at the 70-20-10 rule. Eric Schmidt, the Google CEO, alleges the rule was arrived at through some clever maths from Sergey Brin. An unlikely story, since getting an innovation process right is, like cooking, more an art form than a hard Science.

Initially, Google attempted a classical structured engineering process. The structured BCG matrix approach is excellent for incremental innovation. Maintaining a product in a competitive position, by measuring function or feature points of products in the market. Google abandoned this engineering management approach concluding that while productivity was high creativity and innovation were poor. The process is poor at discrete innovation, at launching new products.

Eric Schmid outlines their current process as follows:

1. 70-20-10 Principle: By the most recent analysis, Google is not as high as 70% in the core of search/ads, so now they're reshifting the focus again to adjust (in other words, we're doing more search again...).

The 20% represents Google's bargain with technical people, allowing them to roam free to encourage creativity---where all the most interesting products emerge.

The 10% is for wacky ideas that might not work out but feel worth pursuing.

2. An "exhaustive drama of arguments and reviews" in "ceaseless GPS [Google Product Strategy] reviews---so much that it's produced a recent internal traffic jam on the servers with so many such teams."

"The goal is to systematize anything...The only way to deal with the growth in scale, is a systematic approach to each and everything we do...Google's making significant storage/computing capacity investments, reusing and combing data from one application to another...."

An interesting glimpse on how you maintain creativity and disruptive innovation once your company and staff mature. The continual GPS (Google Product Strategy) Reviews are akin to Microsoft's continual paranoia of potential threats to their dominance. This is likely to be a core objective for Larry and Sergey, as the future of the company hinges on a continual flow of creative disruption from its development staff.